Ind AS and IFRS: How India Converged, and Where It Differs

IFRS, the International Financial Reporting Standards, is the set of accounting standards issued by the IFRS Foundation and used across much of the world. Ind AS, the Indian Accounting Standards, is India's set, written to converge with IFRS rather than to copy it, so most requirements match and a small number deliberately differ. The deliberate differences are called carve-outs. Two sets of accounts prepared under the two are close enough to compare, and not close enough to compare carelessly.

Suppose every school in a city agrees to teach from one common syllabus so that a certificate from any school means the same thing anywhere. A common syllabus is enormously useful. Then one school discovers that a chapter in the common syllabus contradicts a rule its own trust deed imposes on it. The school has two choices. The first is to pretend to follow the chapter and quietly do something else, in which case its certificate now means something nobody can find out. The second is to say out loud, on the cover of its prospectus, that it teaches the whole syllabus except that one chapter, and here is what it teaches instead and why. Everybody who reads that prospectus can still compare its students with everybody else's, so long as they remember the chapter.

Countries face exactly that choice with accounting standards, and India took the second route. Convergence is the compromise between taking somebody else's rulebook whole and writing a new one from scratch: the rulebook is taken, only the differences that are genuinely needed are kept, and those differences are published. The publishing is the part that makes it workable. A difference nobody announces destroys comparison. A difference announced, numbered and reasoned leaves comparison possible for anyone willing to read one more document.

This guide runs from who writes each set of standards, through what a carve-out is and how one measurement difference moves a reported profit by Rs 2,00,000 while the cash and the trade underneath do not move at all, to a four-step routine for finding which differences apply on the day of reading rather than on the day somebody wrote a summary.

What is IFRS, and who writes it?

IFRS Accounting Standards are developed and issued by the International Accounting Standards Board, the standard-setting body of the IFRS Foundation, an independent, private sector, not-for-profit organisation. The description is the IFRS Foundation's own, from its published profile for India, and two things in it surprise people. The first is that the body writing the rules is not a government and not a regulator but a private foundation. The second is that its standards, on their own, are not law anywhere. The standards become law only when a country's own legal machinery picks them up and gives them force.

IFRS is a rulebook with worldwide reach and no legal force of its own, so whether a country adopts it, converges with it or ignores it is a real decision rather than a formality. Think of a model tenancy agreement drafted by a respected professional body. The model agreement is careful, widely used and well argued. Until a landlord and a tenant sign it, it binds nobody, and either of them may strike out a clause before signing. The strength of the model comes from how many people sign it close to unchanged, not from any power the drafters hold.

What is Ind AS, and who writes it in India?

Ind AS are the standards a company in India applies when it falls inside the scope set for them. Two separate bodies stand behind them and it matters that they are separate. The Institute of Chartered Accountants of India is the recognised standard-setter, and it recommends the standards. The Ministry of Corporate Affairs then notifiesPublishes a rule formally, in the government's own official journal, which is the step that turns a recommendation into something with legal force. them by publishing them in The Gazette of IndiaThe official journal in which the Indian government publishes its notifications. Something published there is authoritative in a way that a press note or a circular summary is not., and it is that publication that makes them authoritative under Indian law. The IFRS Foundation's jurisdiction profile for India sets all of that out, and records that the recommendation runs through consultation with the National Financial Reporting Authority.

Ind AS is not a translation of IFRS and not an independent invention either: it is a set of standards based on IFRS that contains certain carve-outs and carve-ins. The phrasing is the profile's own. The profile also records that Ind AS are modified versions of the international standards, and that beyond the carve-outs and carve-ins the modifications include the use of different terminology, the elimination of a few options, changes in certain disclosures, and other changes to certain requirements. Some of those modifications are mandatory and some are optional. The description names a mechanism rather than a list of rules. A list of the actual differences is correct only on the day it is written, so the mechanism is the durable part, and finding the current list is a routine set out below.

What is the difference between adopting a rulebook and converging with it?

These two words get used as though they were interchangeable, and they are not. Adoption and convergence are two different promises. Adoption means taking the international standards exactly as issued and applying them unchanged. A reader anywhere in the world can then pick up two sets of accounts from two adopting countries and know that the same requirement produced both. Convergence means using the international standards as the base, writing a national set from them, and publishing the places where that set departs. A reader can still compare, but the comparison now has a companion document attached to it.

Adoption buys an assumption a reader can make without checking, and convergence replaces that assumption with a published list a reader has to read. Neither is the better choice in the abstract. Adoption is stronger for comparison and weaker for fit; convergence is weaker for comparison and stronger for fit. The third option is the one nobody names. A country applies most of the rulebook and departs from it quietly, and convergence must never become that. Quiet departure produces accounts that look adopted, compare as though they were adopted, and are not. The published list is the entire difference between the honest version of convergence and the dishonest one.

What is a carve-out, and why would a country make one?

A carve-out is a deliberate difference from the international standard, made for a stated reason and published rather than hidden. The IFRS Foundation's profile for India names two kinds, carve-outs and carve-ins, and describes both as modifications to the international standards; the profile does not define the two words separately, so the safe reading is that both are published, deliberate departures and that what any particular one does has to be read from the standard itself. Hold on to the three words that do the work: deliberate, stated, published. A difference that fails any one of the three is not a carve-out but a mistake, or worse.

The reasons a country departs from an international requirement fall into a small number of recognisable kinds, and knowing the kinds is more durable than memorising any particular instance. The first kind is a conflict with the country's own law: the company legislation requires something the international standard forbids, or forbids something it requires, and one of the two has to give. The second is transition: a change is large enough that imposing it in one year would produce accounts nobody could prepare properly, so it is phased. The third is fit with local conditions. The Institute's own preface, as quoted in the IFRS Foundation's profile, describes the aim as integrating the international pronouncements to the extent possible, in the light of the conditions and practices prevailing in India. The closing clause is the whole third kind in eleven words.

How does one difference in the rules change what a reader sees?

Anjani Stationers, an invented printer of school notebooks, bills schools Rs 2,40,00,000, all on credit, and its profit before tax for year one is Rs 38,00,000. The Rs 38,00,000 is built as Rs 1,14,00,000 of gross profit, less Rs 54,00,000 of salaries, less Rs 12,00,000 of rent, less Rs 2,00,000 of insurance belonging to this year, less Rs 5,00,000 of depreciation, less a Rs 3,00,000 provisionAn amount charged against profit for a cost or a loss that is expected but is not yet certain in its amount or its timing. against the Sunrise Public School group, half of the Rs 6,00,000 that group has overdue.

Now suppose, purely hypothetically, that one framework required that provision to be measured the way it has been measured and the other required a different measurement that produced Rs 5,00,000. Whether the two frameworks actually differ on the measurement of a provision has to be read from the standard itself, not assumed from a worked example. Only the effect of the supposed difference matters. Profit before tax falls from Rs 38,00,000 to Rs 36,00,000. Net receivablesMoney customers have been billed for and have not yet paid, shown in the accounts after deducting anything not expected to be collected. fall from Rs 75,00,000 to Rs 73,00,000. Total assets fall from Rs 1,33,00,000 to Rs 1,31,00,000, equity falls from Rs 1,12,00,000 to Rs 1,10,00,000, and the sheet still balances exactly, with no plug, on both readings.

The trade did not move: the same schools were billed the same Rs 2,40,00,000, the same Rs 1,92,00,000 was collected, and closing cash is Rs 7,00,000 on both readings, yet reported profit differs by Rs 2,00,000, or 5.3 per cent. Sit with that pairing. The pairing is the whole mechanism of a framework difference in one line. One number that describes what happened, the cash, is untouched. One number that describes a judgement about what will happen, the provision, has moved, and it has dragged the profit line and two lines of the balance sheet with it. A reader who watches only the profit line sees a business that did worse. A reader who watches the cash sees no change at all.

Rules of this kind are added and withdrawn, and a worked example built on one that has since been removed reads exactly as confidently as one built on a rule that still stands. The mechanism, on the other hand, does not expire. The actual differences have to be read from the source on the day they are needed.

How is it established which differences apply right now?

The answer is a routine rather than a list, and it has to be a routine for one reason. A list of differences is correct on the day it is written and gives no signal at all when it stops being correct. A stale list does not fade, does not carry a warning, and does not say that a difference was withdrawn last year. This guide is itself re-checked every six months, more often than most, precisely because a difference added or removed makes it wrong rather than merely old. Being wrong is a much worse failure than being stale, and it is invisible to a reader.

Two facts recorded in the IFRS Foundation's profile for India, consulted on 17 August 2026, turn the question from a research problem into a four-step routine anyone can run. The first is that each individual Ind AS includes an appendix that highlights the major differences, if any, between that Indian standard and the corresponding international one. The second is that those major differences, and the reasons for them, are set out in those appendices and in a document on the Institute's website. So the differences are not scattered. The differences sit attached to the very standard already in front of the reader, so the check takes minutes rather than an afternoon.

Step four is the one people drop, and dropping it is what turns a good answer into a bad one over time. A finding without a date attached looks identical at six months and at six years. Meera Rao, who keeps Anjani Stationers' books three days a week, would recognise the discipline immediately. She writes the date on a stock count sheet for the same reason, rather than trusting that she will remember which week it was. The count is only useful if the date it was taken is known.

What discipline applies when comparing accounts across the two?

The discipline is short and it is almost entirely about reading order. Start with the accounting policy noteThe note at the front of a set of accounts that states which rulebook the numbers were prepared under and the specific choices made within it for stock, depreciation, revenue and the rest. in each set. The policy note carries the basis of preparationThe statement at the front of a set of accounts saying which framework the numbers follow and on what assumption about the business continuing to trade. and names the framework. Then read the policies chosen within that framework for the items that actually matter. Two businesses under the same framework can still differ where the framework permits a choice. Only then the profit line. Reading in that order costs four minutes. Reading in the other order costs a conclusion.

Where a framework difference bites on an item that matters, the honest move is to say the two figures are not comparable on that item rather than to invent an adjustment that cannot be supported. Analysts dislike this answer because it leaves a hole in a table. The hole is the correct output. A number manufactured to fill it looks exactly like a number that was measured, and nobody downstream can tell them apart. The one useful middle path is to compare the items the difference does not touch, say so explicitly, and leave the affected line marked rather than filled.

There is also a smaller signal worth knowing about, and it comes straight from the IFRS Foundation's profile for India. The profile answers a direct question, whether an auditor's report or a basis of preparation note in India could state conformity with both the Indian standards and the international ones at once. The answer is that dual conformity is allowed but unlikely, and the reason given is the differences between the two. The profile's answer is a quiet confirmation of the whole argument. If the two sets were the same, dual conformity would be routine. Dual conformity is not routine, and the reason is exactly the set of published differences.

How do an analyst, a lender and an investor actually handle a framework difference?

An analyst meets the problem during screeningA first pass across many businesses, ranking them on a small number of figures to decide which few are worth real work. Speed is the point of it, which is also its weakness.. Because screening is meant to be fast, it is the most dangerous moment for the problem. A sheet ranking twenty printers by profit does not have a column for which rulebook produced each figure, and adding one feels like pedantry until the day the top of the sheet is a business that measured one item differently rather than a business that traded better. The practical habit is to keep the framework in the screen as a column, not as a footnote, and to treat a mixed-framework list as a list that has not yet been ranked.

A lender is not ranking anybody, so a lender meets the problem differently. A lender is testing whether a covenant will be breached, and a covenant is written against a specific line in a specific set of accounts. The lender's real exposure is not that the two frameworks measure differently but that a business changes which framework it reports under while a covenant written against the old measurement stays in force. Loan documents therefore commonly fix the accounting basis at the date of the agreement and treat a later change as something to be recalculated rather than absorbed. A household would recognise the logic: where a rent increase is tied to a published index and the index is then redefined, the agreement is what governs, not the new series.

An investor holding shares in a business that reports under one framework and comparing it with a business abroad that reports under the other does the same thing every year, and the useful discipline is to compare movement rather than level. The level of profit contains the framework difference. The same measurement rule sat under both years, so the change in profit from one year to the next, within one business under one unchanged framework, does not. A difference that is constant across years cancels in the movement and does not cancel in the level. Comparing movement rather than level rescues a surprising number of comparisons that would otherwise have to be abandoned.

All three of them, in the end, are doing the same small thing: reading the policy note before the number, and writing down what they found and when. Anjani Kulkarni, who started Anjani Stationers and still signs its cheques, will never read an international standard. But if a bank ever asks him why his profit fell by Rs 2,00,000 in a year when his cash did not move, the answer he needs lives in a note rather than in the profit line.

Anjani Stationers Private Limited, Anjani Kulkarni, Meera Rao, the Sunrise Public School group and the second printer on the screening sheet are invented.
Educational material. Not advice on any investment, tax, budget or market position.